Finance, grids and energy storage buildout high on agenda, while COP29 President has like his Emirati predecessor landed himself in hot water in run-up to event
Donald Trump’s US election win will “drip poison” into the COP29 climate summit in Azerbaijan, where finance will be the focus as countries are asked to cough up trillions of dollars needed for the renewables rollout and the fight against global warming, say analysts.
The annual climate summit kicking off today in Baku will seeks to capitalise on momentum generated at last year’s edition in Dubai, where countries pledged to triple global renewables capacity to over 11TW globally by the end of the decade.
That momentum could be derailed by the election last week of Trump for a second term as president of the US – the world’s biggest economy and second largest polluter behind China, which has a population four times the size.
An avowed climate change sceptic, Trump during his last term pulled the US out of the Paris Agreement to try and keep global warming to 1.5°C (the world hit 1.46°C of warming last year, according to the UK Met Office).
Because the terms of the Paris deal meant it was three years before the US could formally withdraw – joining Iran, Libya and Yemen as the only non-signatories to the pact – the country was only out for a matter of months before rejoining under the Biden Administration.
This time, however, Trump would reportedly be able to take the US out of the pact in a year, causing far more lasting damage. Trump could also seek to pull the US out of the United Nations Framework Convention on Climate Change treaty, although that would be more complex.
The Biden Administration will represent the US in Baku, but Trump’s looming second term in The White House means any promises made will be taken with more than a few pinches of salt.
The spectre of President Trump 2.0 will “drip poison” into the COP29 climate talks, said BloombergNEF head of global policy Victoria Cumming.
“Trump’s vow to pull out of the Paris deal and perhaps the entire UN process will widen a divide between industrialised economies and developing ones, adding the potential to undercut progress at subsequent meetings.”
Before Trump’s win, BloombergNEF anticipated COP29 scoring 6 out of 10 on nine key areas where progress is needed to make headway towards the Paris goals, including targets on emissions goals, grid buildouts and energy storage capacity.
Now, there is a risk that progress will be bogged down amid “discord” over the likelihood that Trump “unpicks at least some part of the Paris deal, reducing the COP29 score to 5 out of 10.”
Finance in focus
Meeting the goal of tripling renewables capacity by 2030 faces an investment gap of up to US$400bn annually between now and 2030, says the Institute for Energy Economics and Financial Analysis (IEEFA).
Renewables attracted between $570bn-$735bn in last year, an increase of around 73% on four years earlier, it said. But it said the annual investment to hit the tripling target will require between $1tn and $1.5tn from 2024 through 2030.
“While bank credit flows to the fossil fuel sector is declining, it was still a whopping $967bn in 2022,” said IEEFA South Asia director Vibhuti Garg.
By reorienting more capital to the renewable energy sector, banks can bridge the projected investment gap.”
“Negotiators at COP29 in Baku should back their ambition to triple renewable energy up with a consensus on additional climate finance, supported by the developed countries, to fill the gap of catalytic funds in the developing and least-developed countries,” she adds.
REN21, an organisation focused on renewables policy, reports that renewables accounted for 7% of global GDP growth in 2023, with savings in fuel costs reaching $409bn since 2000.
“Despite these gains, renewables still face funding shortfalls as fossil fuels receive far more fiscal support.”
The COP29 Presidency has proposed a fair transition fund financed by fossil fuel producers among their ambitions for the event.
Grids and storage high on agenda
It is often said that there is no transition without transmission and this has clearly caught the ear of COP29 host Azerbaijan.
The COP29 Presidency will push for countries to adopt a target of adding or refurbishing 25 million kilometres of grids by 2030 – enough to wrap around the Earth almost 2000 times over. An additional 65 million kilometres is targeted by 2040.
This comes after International Energy Agency reported that the world must spend $600bn annually to add or revamp 80 million kilometres of grids by 2040, equal to all grids globally today, or risk hobbling the green energy transition.
Azerbaijan also aims to persuade world leaders to increase global energy storage capacity to six times 2022 levels by 2030, hitting 1.5TW.
The importance of energy storage in the green transition has started to take more prominence, with the G7 group of highly industrialised nations this year setting a target of hitting that same 1.5TW target.
Hosts court controversy once again
For the second year in a row, the COP climate summit host is a petrostate.
There was much controversy around this last year, with US and EU lawmakers seeking to remove Sultan Ahmed Al Jaber as president of COP28, amid claims that role was fatally compromised by his position as CEO of Abu Dhabi state oil company Adnoc.
In the run-up to COP28, the BBC reported based on leaked documents that Al Jaber, who also chairs Emirati renewables giant Masdar, had sought to lobby on oil and gas deals in the lead up to the summit, something he denied.
History has repeated itself this year, with the president of Azerbaijan’s COP29 team – Elnur Soltanov, the deputy energy minister of Azerbaijan who is on the board of its state oil giant Socar – having been secretly filmed promoting fossil fuels deals in relation to the event.
Soltanov will hope that he can repeat the achievement of Al Jaber’s presidency last year in getting nations to agree on tangible action at the summit.
COP29 will also be crucial in setting momentum for a meeting in Brazil next year where countries will set out their third round of climate plans, known as Nationally Determined Contributions (NDCs). These documents set out the ambitions of countries in their decarbonisation pathways.
UN climate chief Simon Stiell said recently that the next round of NDCs “may be the most important documents to be produced in a multilateral context so far this century.” No pressure then.
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